KuCoin leads the financing of “CNHC”, but is offshore RMB really suitable for stablecoins?

Recently, KuCoin Ventures, the venture capital arm of cryptocurrency exchange KuCoin, led a $10 million round of financing for the stablecoin issuer behind CNHC. CNHC is a stablecoin pegged to the offshore Chinese yuan. KuCoin focuses on the Chinese market and is registered in Seychelles.

CNHC is pegged 1:1 to Offshore Renminbi (CNH for short). Offshore yuan reserves are held in a depository in Hong Kong.

“This investment in CNHC is part of KuCoin Ventures’ broader strategy to invest in Web3 infrastructure in the Asia-Pacific region,” said Justin Chou, KuCoin Chief Investment Officer and head of KuCoin Ventures, in a statement. “Hong Kong has a well-established traditional financial ecosystem. With the regulation of a new generation of digital assets and the introduction of new policies, Hong Kong has the opportunity to become the new world encryption center.”

CNHC is issued simultaneously on Ethereum and Conflux. On-chain data shows that Ethereum has 23 token holders and 102 transfers, while Conflux has 606 token holders and 1487 transactions.

Long Fan, the co-founder of Conflux, said that Conflux has a large share in China because Conflux “complies with regulatory requirements” in China.

“The significance of CNHC lies in its ability to bridge the traditional financial system with the emerging Web3 landscape, especially as U.S. regulatory scrutiny intensifies,” he told CoinDesk in a note. provides a practical alternative for businesses and users looking for compliance options outside of our regulatory framework.”

Finding an Alternative to the Dollar
The vast majority of stablecoins are backed by the U.S. dollar. While there are stablecoins based on other fiat currencies (e.g. EUR, GBP), none come close to the number of USD-pegged tokens.

On the one hand, this strengthens the hegemony of the dollar. A CoinDesk columnist argues that the next dollar-denominated financial sector is largely a good thing as it expands U.S. rulemaking.

But at the same time, not everyone wants to play by US rules, especially if they have no ties to the US. U.S. regulators are also reluctant to allow cryptocurrencies to fully enter the U.S. banking system until strict federal regulation is established.

The market itself doesn’t like this kind of US-centric centralization risk. The USDC de-pegged several times during the crypto banking crisis, and while it was recently re-pegged, smart investors are skeptical.

Despite the market’s skepticism towards algorithmic stablecoins after Terra’s crash last year, BitMEX co-founder Arthur Hayes believes that the answer to all this is still to launch an algorithmic stablecoin based on Bitcoin derivatives, and named this token “kakaDollar”.

CNH certainly has a successful use case in China’s offshore bond market for which it was built. But the cryptocurrency market is another story entirely.

The market is not alone in its skepticism.

Alex Liu, chief executive of Taipei-based Maicoin, said in a recent interview with CoinDesk that the yuan, which is tightly controlled both onshore and offshore, cannot solve the problem.

“I think the only real challenge to the dollar is the yuan. But not through cryptocurrencies, not through China’s CBDC,” he said, referring to the central bank’s digital currency. The real focus, he said, is oil trading in yuan. “Most of the trade between Russia and China is de-dollarized,” he said.